The Supreme Court of North Carolina on June 10 unanimously affirmed a lower court’s ruling that the North Carolina Department of Transportation effectively takes away property rights and initiates eminent domain when it records a corridor protection map under the state’s Map Act. As such, property owners are due just compensation.
North Carolina’s Map Act authorizes the NCDOT to file official roadway maps that list properties in the path of a proposed roadway in order to create a “protected corridor.” The NCDOT had refused to pay owners just compensation for the harms that result from having their properties listed in a protected corridor, including the inability to develop or make improvements to the properties.
Property owners argued that corridor protection maps and related development restrictions are an exercise of the NCDOT's eminent domain power entitling them to just compensation. The NCDOT had argued that corridor protection maps are more like basic planning or zoning activities, and therefore no compensation was owed.
Minnesota Gov. Mark Dayton on May 23 signed into law SF 2665
, legislation that makes several changes to the state’s existing appraiser licensing and appraisal management company registration law, which originally was enacted in 2010.
The new law changes definitions to clarify that entities utilizing employee appraisers to complete appraisal assignments are not AMCs. The law also clarifies that entities with more than 15 independent contractor appraisers in Minnesota or more than 25 contractor appraisers in two or more states are AMCs and therefore subject to the state’s AMC registration and oversight law.
The new law also will require AMCs operating in Minnesota to compensate appraisers at a rate that is reasonable and customary, and to pay appraisers within 30 days or otherwise face disciplinary action by the state’s Department of Commerce.
Additionally, the Minnesota law eliminates a provision in the state’s appraiser licensing and certification law that had permitted the Minnesota Department of Commerce to charge appraisers the costs of an investigation even if the investigation found no violations on the part of the appraiser.
The Colorado Division of Real Estate currently is conducting a review of the Board of Real Estate Appraiser rules
to assess the continuing need for and the appropriateness and cost-effectiveness of the regulations.
The review will help officials determine if the rules should continue in their current form, be modified or get repealed. Among the issues under consideration:
Necessity of the rules
Effectiveness of the rules
Clarity of the rules
Efficiency of rules implementation and enforcement
Whether the rules overlap or duplicate other agency, federal, state or local government rules
Whether the rules can be amended to provide flexibility, reduce regulatory burdens or reduce unnecessary paperwork or steps
Whether a cost-benefit analysis was performed by the applicable rule-making agency or official in the principal departments
Whether the rules provide adequate safety, health and welfare for the state and its residents
An Appraisal Institute review of the minutes from a May 3 meeting of the Enforcement Oversight Committee of the Oregon Appraiser Licensing and Certification Bureau indicates that the ALCB continues to believe — incorrectly — that missing an appraisal due date is an actionable violation of the Oregon appraiser licensing law.
The ALCB previously issued an alert to appraisers in Oregon indicating that missing an appraisal due date violated the Uniform Standards of Professional Appraisal Practice.
A Q&A released Feb. 10 by the Appraisal Standards Board of The Appraisal Foundation refuted the ALCB belief stating, “Assignment due dates are contractual obligations but are not assignment conditions under USPAP. Turnaround times and similar items are business practice issues and are outside the scope of USPAP.”
The ALCB meeting minutes stated, “Although late reports are not a USPAP violation, it might be a statute violation such as negligence or fraud” and continued, “According to legal counsel, the public needs to be protected and [it] won’t be a problem going to a hearing with this problem.”
The Indiana Court of Appeals ruled May 16 that an appraiser has no duty of care to a seller after he or she appraises a house for much less than the proposed purchase price. The court upheld summary judgment for the appraiser in a case where the seller alleged negligence, fraud and slander of title. The case is BSA Construction LLC v. Jimmie E. Johnson, 49A02-1506-CT-749
BSA Construction entered into an agreement to sell residential real estate to Lilia Lopez. Lopez received financing from Bank of America pending a final appraisal, which was done by Jimmie Johnson of LandSafe. The purchase price was agreed at $60,000, but Johnson only appraised the property for $50,000 and Bank of America denied financing.
BSA claimed Johnson owed them a duty of care on negligence principles, but the court disagreed, ruling that Johnson’s duty of care was to the bank that hired him, not BSA. “In an arms-length transaction like the one here, we cannot conclude that Johnson had any duty to serve two masters with conflicting interests. Whether Johnson was bound by or aware of the code of ethics of a professional association, or knew that a poor appraisal might be associated with the real estate for some period of time, does not change the fundamental arrangement of the duties at issue here,” Judge L. Mark Bailey wrote for the panel. “Johnson’s duty was to the bank and as a matter of law cannot — because of the contradictory interests at issue — have extended to BSA.”
Louisiana Gov. John Bel Edwards on May 26 signed into law HB 804
, legislation that clarifies that appraisal management companies are required to compensate appraisers in accordance with the reasonable and customary fee provisions contained in federal law. The law also gives the Louisiana Real Estate Appraisal Board the authority to collect from AMCs the required National Registry Fees.
Also in Louisiana, the state’s Real Estate Appraisers Board on June 20 promulgated several new rules
applicable to AMCs, including one that prohibits AMCs from requiring appraisers to sign an indemnification agreement. Additionally, the rules state that the LREAB can take action against an AMC or any person who owns or participates in the business of an AMC if the AMC fails to notify the board within 10 days of any disciplinary action imposed against the AMC, its owners or employees in any state. The rule also requires AMCs to pay appraisers within 30 days after the date on which the appraiser provides the completed report to the AMC. Finally, the rules require appraisers and appraisal firms performing services for AMCs to disclose in the appraisal certification the compensation that was paid to the appraiser or the appraisal firm.
The Illinois General Assembly on May 31 completed action on HB 3333
, a bill that would create an Appraisal Management Recovery Fund to be used in lieu of the existing surety bond. This fund will be used to provide restitution to Illinois state-credentialed appraisers when they have not been paid by a failed AMC but have obtained a final judgment from a court. The fund will be subsidized by a fee (up to $500) that each AMC operating in Illinois has to pay until such time as the fund reaches $500,000. Once that amount is reached, the fee will no longer be imposed unless claims are paid.
Work continues in Massachusetts on HB 4399
, legislation that would enact a comprehensive registration and oversight program for appraisal management firms operating in the commonwealth.
Legislation currently pending in Michigan would change the way the state’s Tax Tribunal would be required to consider property tax assessment appeals. HB 5578
would require the MTT to conduct its own appraisal of the subject property and include comparable properties that have the same highest and best use.
The bill was introduced in repose to the “dark store” phenomenon in which large big box stores see lower than expected property valuations because the value is based on comparable sales of other properties instead of true cash value. The bill, which has passed the House and is pending in the Senate, is supported by the Michigan Municipal League, the Michigan Townships Association and the Michigan Association of Counties.
Legislation in New Jersey that would regulate appraisal management companies passed the Assembly and will now be considered by the Senate. Further amendments to A 1973
, the Appraisal Management Company Registration and Regulation Act, are pending.
North Carolina Gov. Pat McCrory on June 30 signed into law SB 600
, legislation that requires appraisal management companies operating in the state to compensate appraisers at a reasonable and customary rate in accordance with federal law. AMCs that violate the reasonable and customary fee compensation requirements would be subject to disciplinary action by the North Carolina Appraisal Board.
Legislative action in Pennsylvania that would bring the state into compliance with Appraiser Qualifications Board requirements is nearing completion. SB 1270
would allow the State Board of Certified Real Estate Appraisers to consider criminal history record information only “to the extent required by standards and regulations for the qualifications of appraisers promulgated by the AQB when deciding whether to grant or renew an appraiser credential.” Previous versions of the bill would have required applicants to undergo fingerprint-based background checks, but those provisions were removed at the request of the Coalition of Pennsylvania Real Estate Appraisers.
South Carolina Gov. Nikki Haley on June 5 signed into law HB 5023
, legislation that makes changes to the state’s appraiser licensing and certification law.
The law will require that two of the four appraisers on the South Carolina Real Estate Appraisers Board must be certified general appraisers and one must be a certified residential appraiser. The law also exempts from the state appraiser licensing requirements “an employee of a lender in the performance of appraisals or valuations with respect to which federal law or regulations does not require a licensed or certified appraiser.” The exemption does not apply to third party contractors. Lastly, the law will allow the Board to issue both public and private reprimands to appraisers who are the subject of disciplinary action by the Board.
The South Dakota Department of Labor and Regulation on July 8 held a hearing on proposed amendments to the state’s appraiser licensing and certification rules. The rules under consideration would allow appraisers to submit appraisals for compliance review midway through the experience hours required to upgrade to a higher level of licensure or certification. They also would introduce the term “Allegation of Non-Compliance” to note the first step to initiate an investigation, replacing the term “noncompliant.”
MEETINGS OF NOTE
Appraisal Institute staff attended the CRE Finance Council Conference, June 13-15, in New York. The meeting brought together leaders in all sectors of the commercial real estate finance industry to address such issues as securitization, balance sheet lending, specialty lending and investing. Several AI Designated Members attended the conference.